Village Enterprise

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GiveWell aims to find the best giving opportunities we can and recommend them to donors. We tend to put a lot of investigation into the organizations we find most promising, and de-prioritize others based on limited information. When we decide not to prioritize an organization, we try to create a brief writeup of our thoughts on that charity because we want to be as transparent as possible about our reasoning.

The following write-up should be viewed in this context: it explains why we determined that (for the time being), we won't be prioritizing the organization in question as a potential top charity. This write-up should not be taken as a "negative rating" of the charity. Rather, it is our attempt to be as clear as possible about the process by which we came to our top recommendations.

Published: November 29, 2011

Summary

Village Enterprise provides business training, mentoring, and grants (as opposed to loans) directly to very poor individuals living in the developing world.

Village Enterprise's model of providing monetary grants is relatively uncommon among economic empowerment organizations working in developing countries (see our overview of cash transfer programs) -- most organizations provide loans or training without cash. Its commitment to monitoring and evaluation is among the strongest we have found in the area of economic empowerment in the developing world.

Village Enterprise targets poor clients and collects data on their standards of living, addressing a key concern about cash grants. However, the majority of program funding does not reach participants in the form of grants; this spending includes (but is not limited to) costs involved in identifying participants and delivering grants, and providing business mentorship and training. We have not yet seen strong evidence of effectiveness for Village Enterprise's mentorship and training programs.

We initially recommended Village Enterprise in 2009 (see our 2009 review). Since we published the 2009 review, our understanding of the how much of Village Enterprise's spending reaches clients in the form of grants has changed.

Our judgments are necessarily a function of the information we have and the limited time we can devote to any organization. Given the information we have at this time, Village Enterprise does not qualify for our highest ratings.


Table of Contents

What do they do?

Village Enterprise provides training, mentorship and grants of $150 to business groups of three people each.1 Mentorship is provided by full- or part-time business mentors trained and employed by Village Enterprise.2 Village Enterprise has also recently begun to diversify into other types of activities, including savings and environmental conservation.3

Village Enterprise has historically spent approximately 40% of its funds on business grants, but that figure has declined substantially since 2008.4

Our improved understanding of what proportion of its funding Village Enterprise intends to grant to clients leads us to believe that a lower portion of overall spending is reaching poor individuals in the form of grants than we believed in 2009. Further discussion is available in our 2009 review.

Does it work?

We focused our evaluation on two questions:

  1. Does Village Enterprise transfer wealth to extremely poor individuals?
  2. Does Village Enterprise help its clients to increase their standard of living above and beyond the direct cash benefits Village Enterprise provides?

Does Village Enterprise transfer wealth to extremely poor individuals?

As we discuss in our 2009 review of Village Enterprise, we believe it is likely that Village Enterprise's intended recipients are very poor, though we expressed concerns at that time about whether funds might sometimes fail to reach the intended individuals.

Village Enterprise told us that, since our 2009 review, it has made programmatic shifts to prevent and detect cases of misappropriation. Village Enterprise reports that it has:5

  • Instituted a formal zero tolerance policy for misappropriation of funds, which is emphasized in business mentor and client training sessions.
  • Conducted more frequent random audits of businesses.
  • Detected a few minor instances of apparent misappropriation and subsequently ended the employment of the involved business mentors.
  • Hired a security firm to handle the disbursal of funds, so that no staff members handle the money before it reaches clients.
  • Implemented a new targeting process for selecting clients.

We have not evaluated how effective these policies are in practice.

Does Village Enterprise help its clients to increase their standard of living above and beyond the direct cash benefits Village Enterprise provides?

In our 2009 review, we discuss a Village Enterprise impact assessment which found that clients' standard of living increased significantly in the few years following participation in the program. However, we do not believe that this impact assessment provides strong evidence that these changes were due to Village Enterprise's program.

Since our 2009 review, Village Enterprise has conducted an additional evaluation, focusing on the sustainability of the businesses that it funds.6 This study of 150 grant recipients in Kenya found that, 2-5 years after receiving their grant, "74.7% of businesses [were] still operational in some form."7

We do not believe that this study provides strong evidence that Village Enterprise's program improves the wellbeing of its clients above and beyond the value of the cash grants it provides. It is not possible to determine from this study whether Village Enterprise's program results in more business activity among clients than otherwise would have occurred. In addition, although many of the businesses survive in some form, the study does not report what proportion of businesses are generating profits, and it is not clear whether clients are better off as a result of running the businesses. Village Enterprise notes, "The amount of profitability was not the objective of the longevity study, but one can logically assume that the business owners, who started out quite poor, would not continue in the businesses for 2-5 years if they were losing money or even simply breaking even."

We have not seen evaluation results for Village Enterprise's savings or environmental conservation programs. Village Enterprise told us that its savings program is modeled on a CARE group savings program that had been evaluated.8 Village Enterprise pointed us to three documents on this program, which we have not yet reviewed:

Village Enterprise has shared details of its 2011-2015 monitoring and evaluation plans (DOC) and notes that the version on its website will be updated over time.

Sources

  • 1.

    Jennifer Nixon, phone call with GiveWell, August 10, 2011.

  • 2.

    Jennifer Nixon, phone call with GiveWell, August 10, 2011.

  • 3.

    Jennifer Nixon, phone call with GiveWell, August 10, 2011.

  • 4.

    Data from:

    • VIllage Enterprise Fund, "Annual Report (2009)."
    • Village Enterprise Fund, "Audited Financial Statements (2002-2008; 2010)."
    • Village Enterprise Fund, "Unaudited Financial Statement (2011)."
    • VIllage Enterprise Fund, "Board Approved Budget (2012)."
  • 5.

    Jennifer Nixon, phone call with GiveWell, August 10, 2011.

  • 6.

    Rose 2010.

  • 7.

    Rose 2010, Pg 2.

  • 8.

    Dianne Calvi and Jennifer Nixon, phone conversation with GiveWell, November 21, 2011.

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